JERUSALEMAt the first major intersection on the outskirts of Jerusalem, our tourist bus encountered a massive demonstration.

Pedestrians lined both sides of the road, waving homemade banners and flags, and chanting slogans. Passing cars began honking their horns in unison.

Another Palestinian protest? No, it was the prelude to a Sunday-night showdown between the Jerusalem and Haifa teams in the Israel professional soccer league.

The normalcy of the moment was a soothing reminder of the central fact that our Israel government-sponsored tour had been arranged to emphasize - the Palestinian intifada (riots) has not made the country a violent, dangerous place for tourists.

The perception of danger has had a massive impact on the country's multi-billion-dollar-a-year tourist industry. Government officials estimate bookings have dropped at least 40 percent in the last two months; tourist industry sources say the cut may be as high as 70 percent.

In briefing sessions for our group of 19 reporters and editors, officials stressed their belief that the country is a safe destination but that it is losing tourists whose fears are fed by a media preoccupation with shooting and violence. Those incidents, officials stress, are almost exclusively limited to the West Bank and the Gaza Strip and affect a relative handful of small, geographically separated settlements that would not be on the itinerary of most tourists.

While a riot in the north cost the lives of 12 Israeli Arabs in October and a bus bombing in Hadera took Israeli Jewish lives, the only ongoing violence in Israel proper is the evening sniping in the Jerusalem suburb of Gilo. Even that is confined to the two streets facing the Arab village of Beit Jalla and has dwindled in recent days.

"Everybody knows to be away from those streets by evening," said our bus driver, Dudu (David), who lives in Gilo.

State Department Caution

Israeli officials and American Jewish leaders are adamant that a U.S. State Department warning against travel to Israel is misguided. A State Department official last week said the agency has never limited a travel advisory to a specific area, but includes the entire country.

Amnon Lipkin-Shahak, minister of tourism and transportation, said the year 2000 was a record year for tourism to Israel, fueled by the mid-1999 conditions of an impending peace agreement between Israel and the Palestinians, and the Millenium celebrations. He said tourism increased by 20 percent in 1999 and was projected to go up 30 percent in 2000.

With the downturn caused by the intifada, Israeli officials are hoping to break even for the year. "In a matter of days" after the riots started in late September, "our numbers went down," said Lipkin-Shahak, and the continuing strife has cost 15,000 Israelis their jobs.

Lipkin-Shahak said his ministry is encouraging Israelis to travel inside Israel, rather than vacationing abroad. And American evangelical Christian groups continue to arrive, but not in the same numbers.

What we saw in a week of hopping around the country that took us from Jerusalem and Tel Aviv to Haifa and Eilat was repeated scenes of normalcy. While the people we talked with were concerned about the continuing national issues such as the future of the peace process, all stressed they had no physical fear of the Palestinian uprising and that visitors wouldn't either.

Jerusalem

Jerusalem, and all Israel, is experiencing a construction boom. New suburbs, new buildings are going up everywhere, and Israel's national "bird" - the construction crane - is ever-present.

People fill the sidewalks in west Jerusalem and vehicle traffic is heavy. What is missing are the tourists.

The streets of the Old City are quieter and the Western Wall plaza nearly empty, although Jewish worshippers continue to crowd near the ancient temple's stone wall.

The Jewish Quarter was bustling with residents, but tourists were notably absent from the streets, the Cardo shopping area and other ancient attractions. Our group of journalists had the dining room of the King David Hotel nearly to ourselves.

El Al Israel Airlines, the primary carrier of tourists to Israel, has also suffered, but it is not dropping rates. It is dropping flights, according to spokesman Nachman Kleiman.

El Al is switching from Boeing 747s to smaller aircraft when necessary, and consolidating flights. Our 747 flight from New York to Tel Aviv was full, with an estimated 50 percent of the passengers black-hatted Orthodox Jews.

Kleiman said El Al had dropped two or three of its regular two dozen weekly flights from New York and Newark. The airline projected 350,000 passengers for October, 240,000 in November and 220,000 in December, drops of 20-30 percent from last year. The airline has three Boeing 777s scheduled for delivery in 2001, with one of the 400-passenger craft scheduled for Chicago to Tel Aviv service.

Haifa

Mayor Amran Mitzna waded into the heart of an angry street demonstration in downtown Haifa in October. Escorted by Israeli Arab friends, the mayor talked for three hours with Arab citizens irate over the deaths of 12 Israeli Arabs in protests in northern Israel.

Haifa, proud of its relations with its Arab minority, is trying to become a tourist destination. It's famous Baha'i gardens and shrine, dominating the Mt. Carmel slope overlooking the city, will celebrate its completion next May.

The city has three Arab city councilmen, the city comptroller is Arab, as are 22 percent of municipal employees.

Mayor Mitzna made a strong pitch for Jewish tourism to Israel. "It is the densest locale of Jewish attractions in the world and you can connect to this miracle, this big project of the Jewish people," he said. "Holy places, shopping, laying on the beach, famous places - they are all here.

"It is not what you see on TV," said Mitzna. "Come now, come support us. It will help you understand what it is to be a Jew."

Some of the journalists, staying in the Dan Carmel Hotel, were awakened by what sounded like gunfire. Tour leader Geoffrey Weill assured them there had been no violence in Haifa that night. "It would be self-defeating to bring people here if it were not safe," Weill said.

The journalists remained skeptical until they heard the same sounds while touring the 19 terraces of the Baha'i gardens - it was the sounds of ships being unloaded in Haifa harbor.

Tel Aviv

Former Detroiter Sherry (Domstein) Fox and her husband Michael have been in Tel Aviv for a month. Michael is on a six-month assignment in Israel for Nortel Communications.

The two Bethesda, Md., residents are polishing their two years of University of Michigan Hebrew classes - Michael at work and Sherry in an ulpan. They're having a wonderful time in Israel and find it very safe.

"There are things happening 30 miles away, but there is nothing happening here," said Sherry. Added Mike, "There are areas of Detroit that you wouldn't go into at night. But less than 30 miles away, you feel safe in your home in the suburbs."

Their view was reflected throughout Tel Aviv. The lobby of the Crowne Plaza Hotel on the beachfront was abuzz with activity-sights and sounds that were missing at the King David in Jerusalem and Haifa's Dan Carmel. People were walking the streets, and the restaurants were busy.

Michael Fox attributed the difference to Tel Aviv's position as Israel's commercial capital. "It's not as reliant on tourism," he said.

Eilat

The Marine Park and Underwater Observatory is on the outskirts of Eilat, within a stone's throw of Taba, Egypt, and just minutes from Jordan and Saudi Arabia.

This little corner at the hot and rocky southern tip of Israel serves as the Florida of Europe. Just a 10-minute drive or 40-minute glass-bottomed boat ride from Eilat's hotel/palaces, the Marine Park was expecting a healthy increase in business this year.

"The beginning of the year was so good," said Marine Park's Michal Levy, "Eilat was projecting 50 percent more tourists and we predicted 10-20 percent more in the park."

Instead, the park has experienced a 62 percent decline in foreign visitors and a 20 percent decline in Israeli visitors.

Its shark tank, coral reef and yellow submarine ride are easily accessible for the visitors who come. Similarly, Eilat's hotels are busy, but nowhere near the expectations.

Rina Maor, local director for the tourism ministry, said Eilat averages four days of rain per year. "And it's faster to get to Eilat from New York than it is to get from New York to Hawaii," she added.

Good thing, too. Since it sprinkled during our boat ride from the Marine Park, and poured the next morning, the odds of it raining during your visit to Eilat were just cut in half.